Banking stocks slide as global investors seek safer shores

Banking stocks fell again on Friday, with shares in German giant Deutsche Bank knocked by worries that regulators and central banks have not yet contained the worst shock to the sector since the 2008 global financial crisis.

Wider indicators of financial market stress were also flashing, with the euro falling against the dollar, bond yields sinking and the costs of insuring against bank defaults surging despite efforts by policymakers worldwide to reassure investors.

While the index of top European banks fell 3.5%, most major U.S. lenders fared slightly better, with JPMorgan Chase & Co, Citigroup and Bank of America down between 1% and 2%.

U.S. regional lenders such as First Republic Bank, PacWest Bancorp, Western Alliance Bancorp and Truist Financial Corp were also between 1% and 2% lower.

“Underlying sentiment is still cautious and in this environment no one wants to go into the weekend risk-on,” said Nordea chief analyst Jan von Gerich.

“It’s very volatile and it’s too early to say things will calm down.”

European banks’ Additional Tier 1 (AT1) debt – a $275 billion market which was plunged into the investor spotlight during the rescue of Credit Suisse AG – also came under further selling pressure.

These bonds can be written off during rescues to prevent the costs of bailouts falling onto taxpayers.